Fibra Prologis Reit Ctfs

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fibra Prologis fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. We ask that you please limit your questions to one and return to the queue for any additional questions that you might have. If you'd like to withdraw your question, press star one again. I'd now like to turn the conference over to Alexandra Villalante, Head of Investor Relations. You may begin.

Thank you, Regina, and good morning, everyone. Welcome to our fourth quarter 2023 earnings conference call. Before we begin our prepared remarks, I would like to remind everyone that all the information presented in this conference call is proprietary and all rights are reserved. The information has been prepared only for information purposes and is not a solicitation of an offer to buy or sell any securities. Forward-looking statements during this call speak only of the date of this call. Our actual results, performance, prospects, or opportunities may differ materially from those expressed in or implied by the forward-looking statement. Additionally, during this call, we may refer to certain non-accounting financial measures. The company does not assume any obligations to update or revise any of these forward-looking statements in the future, whether as a result of new information, future events, or otherwise, except as required by law. As is our practice, we have prepared supplementary materials that we may reference during the call as well. If you have not already done so, I will encourage you to visit our website at fibraprologist.com and download this material. Today, we will hear from Hector Ibarzabal, our CEO, who will discuss our strategy and market conditions, and from Jorge Giró, our Senior Vice President of Finance, who will review results and guidance. Also joining us today is Federico Cantú, our Head of Operations, and Alejandro Chavelas, our Head of Evaluations and Research. With that, it is my pleasure to hand the call over to Hector.

Thank you, Ale, and good morning, everyone. I want to start mentioning that this is my first call as CEO, and I'm very excited about the potential our team can accomplish in the near future. Luis was a great partner for more than 30 years. It has been an honor working with him. I want to welcome in this new cycle Federico Cantu, our Head of Operations, who has been with Prologis for 18 years and will be participating in our earnings call as our new FIBRA COO. 2023 has been a record year since our inception. We had good expectations at the beginning of the year, and our results ended up surpassing them. As we move into a new year, we continue to benefit from strong market conditions. a best-in-class portfolio, and a unique customer service. We had extraordinary figures, reaching almost 100% occupancy, something unseen for a portfolio of this size, and we accomplished a record 42% on rent change. Regarding capital markets, during the year, we also outperformed, as we reached a 50% total return, including dividends. We are now part of the MSTC, I-Mexico Index, and we significantly improved our certificate liquidity, having a current daily average trading value of $7 million. Last May, we successfully completed a follow-on of $400 million, which was priced at 59 pesos. and with our outstanding results combined with positive market conditions, allow us to deliver a 37% certificate price return since then. The market is recognizing our ability to raise rents, which brings as a consequence a growth in the value of our assets, a concept that we constantly refer to as value creation. Year over year, our same store asset values grew 21%. where most of this delta comes from rental increase. We acquired $330 million in new properties using the proceeds from the follow-on. All of these assets are core product and within our six markets. Our current GLA is almost 47 million square feet, which is an 8% growth compared to 2022 and almost 60% increase since IPO. We made substantial progress on our ESG goals. Prologis Energy Program commencement last October is a very important milestone on this regard. Jorge will provide more details on this. Now, I'd like to talk about market conditions. Net absorption in our six markets reached a new record of around 39 million square feet in the year. Interest in the sector has kept investors active in trying to supply new products. but challenges in infrastructure and entitlement are keeping a healthy balance between supply and demand. Year-end market vacancy ended at a low number of 1.4%. Our rent growth, a key driver of our value creation, continues to outperform. While market rents grew 22%, we were able to surpass a 40% rent change on rollover. This number is by far the highest in the sector. Let me provide a bit more color about our market. Energy and infrastructure availability for new development remains very limited. We believe this condition is preventing customers from having even a more accelerated expansion plan. Monterrey was again the most active market with 15 million square feet of net absorption and 14 million square feet in new completions. Near-shoring is driving most of this demand. Mexico City low vacancy is evidence of the complexity of finding suitable lands and the big challenge of endowment process. Consumption, including e-commerce, is still one of the main engines of demand. Several e-commerce players have aggressive plans for the following two years. Tijuana is the most constrained market on the supply side, mainly due to electricity availability. we expect the Iguana market trends to keep on growing during this year. Juarez and Reynosa remain with a healthy supply-demand balance with a strong pipeline of customers. Before I finish, I would like to mention the fact that 50% of world population will go through elections, including Mexico and the U.S., events that we do not control and that could bring some market volatility. To summarize, We expect favorable market conditions will remain, allowing more significant leasing power to continue increasing the value of our portfolio. As it relates to internal growth, we will continue to push rents up, which will generate higher cash flow. We believe that this year we will see significant increases on rent change on rollover. On the external front, we will remain active and opportunistic. Prologis currently has 3.2 million square feet under development that we will offer to FIBRA in the next 12 to 18 months. We will continue to evaluate, as well, third-party opportunities that are accretive and are aligned to our business model. In terms of our balance sheet, we will view it as a competitive advantage. It is the strongest in the sector and will allow us to play offense. We are looking forward to another great year in 2024. With that, I will pass the call over to Jorge.